Feds Bust Identity Theft Ring

US Attorney brings charges in a six-year case involving electronic tax returns with pilfered or unauthorized use of social security numbers.

The US Attorney's office in New York has charged 17 suspects with a tax and identity fraud scheme that allegedly netted more than $7 million in fraudulent tax returns.

Federal officials said they were searching for two more suspects allegedly involved with the scheme that involved a tax preparer, pilfered social security numbers and electronic filing of tax returns.

In a complaint unsealed in Manhattan Tuesday, James Comey, US Attorney for the Southern District of New York, said the case involved a tax preparer who was arrested on fraud charges and who later agreed to cooperate in the investigation. Most of the social security numbers used in the ring came from people who had died, the charges said.

As a result of the probe, federal authorities said they uncovered a scheme going back to 1997 and through January 2003, which involved thousands of false and fraudulent Individual Income Tax Returns, including Forms 1040, and Forms 1040A.

The defendants, the charges said, were filing returns for people who were not entitled to the refunds, or filing returns for people whose identities the defendants stole or used without authorization in a plan to keep tax refunds for themselves.

Many of the fraudulent filers or people listed as dependents on the filers' returns were either dead or were not related to the suspect filers, the charges said.

The US Attorney's office said in some cases, and especially during 2001, the defendants used the IRS's "Electronic Filing" or "ELF" system to file false income tax returns.

In these cases, the complaint said, the fraudulent tax returns were sent to the IRS electronically and then lined up for "refund anticipation loans" purportedly on behalf of the so-called taxpayers that were put forth in the scheme.

The investigation is continuing, but for now, the case said over the course of about six years, the ring allegedly skimmed at least $7 million in fraudulent refunds.